State Retirement and Pension System – Cost–of–Living Adjustments – Clarification

EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*hb1138*

HOUSE BILL 1138
P6 EMERGENCY BILL 6lr2662
CF SB 724
By: Delegate Forbes
Introduced and read first time: February 11, 2026
Assigned to: Appropriations
Committee Report: Favorable
House action: Adopted
Read second time: February 26, 2026

CHAPTER ______

AN ACT concerning 1

State Retirement and Pension System – Cost–of–Living Adjustments – 2
Clarification 3

FOR the purpose of clarifying the Consumer Price Index used to determine the 4
cost–of–living adjustments for retirees of the State Retirement and Pension System 5
in certain years; and generally relating to calculating the Consumer Price Index 6
change for cos t–of–living adjustments for retirees of the State Retirement and 7
Pension System. 8

BY repealing and reenacting, without amendments, 9
Article – State Personnel and Pensions 10
Section 20–101(a) and (d), 29–401(d) and (f), and 29–402(c) and (d) 11
Annotated Code of Maryland 12
(2024 Replacement Volume and 2025 Supplement) 13

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 14
That the Laws of Maryland read as follows: 15

Article – State Personnel and Pensions 16

20–101. 17

(a) In this Division II the following words have the meanings indicated. 18

2 HOUSE BILL 1138

(d) “Allowance” means a benefit that is payable in equal monthly installments for 1
the life of the recipient, except as otherwise provided for an optional form of an allowance 2
under § 21–403 of this article. 3

29–401. 4

(d) “Consumer Price Index” means the annual average Consumer Price Index (all 5
urban consumers, United States city average, all items, not seasonally adjusted, 1982–1984 6
= 100) for the calendar year ending December 31 as published by the United Sta tes 7
Department of Labor, Bureau of Labor Statistics. 8

(f) “Cost–of–living rate” means the rate computed in accordance with § 29–402(c) 9
of this subtitle that is used to determine a cost–of–living adjustment. 10

29–402. 11

(c) (1) Except as provided in paragra ph (2) of this subsection, and subject to 12
subsection (f) of this section, to determine the cost –of–living rate used to adjust an 13
allowance in a fiscal year, the Board of Trustees shall: 14

(i) subtract the Consumer Price Index for the calendar year ending 15
December 31 in the second preceding fiscal year from the Consumer Price Index for the 16
calendar year ending December 31 in the preceding fiscal year; and 17

(ii) divide the amount determined under item (i) of this paragraph 18
by the Consumer Price Index for the calendar year ending December 31 in the second 19
preceding fiscal year. 20

(2) The cost–of–living rate used to adjust an allowance in a fiscal year may 21
not exceed any cost–of–living rate cap that is applicable to the allowance under § 29–404(c), 22
§ 29–405(c), § 29–406(c), or § 29–408(c) of this subtitle. 23

(d) (1) A cost–of–living adjustment payable in a fiscal year shall be determined 24
as provided in this subsection. 25

(2) For a compound cost –of–living adjustment, the cost –of–living 26
adjustment as of July 1 of a fiscal year shall be determined by multiplying the 27
cost–of–living rate determined in subsection (c) of this section by the sum of: 28

(i) the initial allowance; and 29

(ii) the accumulated cost–of–living adjustment amount. 30

(3) For a simple cost–of–living adjustment, the cost –of–living adjustment 31
as of July 1 of a fiscal year shall be determined by multiplying the cost –of–living rate 32
determined in subsection (c) of this section by the initial allowance. 33

HOUSE BILL 1138 3

SECTION 2. AND BE IT FURTHER ENACTED, That: 1

(a) (1) In this section the following words have the meanings indicated. 2

(2) “CPI Value” means the Consumer Price Index value (all urban 3
consumers, United States city average, all items, not seasonally adjusted, 1982–1984–100) 4
for a month, as published by the U.S. Department of Labor, Bureau of Labor Statistics. 5

(3) “October 2025 Index Value” means the Consumer Price Index value for 6
the month of October 2025, as determined by this section. 7

(b) This section applies to the Consumer Price Index for the calendar year ending 8
December 31, 2025, for purposes of calculating the cost –of–living rate used to adjust an 9
allowance under § 29 –402(c) of the State Personnel and Pensions Article effective July 1, 10
2026, and July 1, 2027. 11

(c) The October 202 5 Index Value is the sum of the CPI Values for September 12
2025 and November 2025, divided by 2. 13

SECTION 3. AND BE IT FURTHER ENACTED, That this Act is an emergency 14
measure, is necessary for the immediate preservation of the public health or safety, has 15
been passed by a yea and nay vote supported by three –fifths of all the members elected to 16
each of the two Houses of the General Assembly, and shall take effect from the date it is 17
enacted. 18

Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
Speaker of the House of Delegates.
________________________________________________________________________________
President of the Senate.